Cromwell Property Group (ASX:CMW) reported higher operating profit for the half year ended 31 December 2025, alongside asset valuation gains and continued progress on the group’s strategy to expand third-party funds management.
Half-year financial performance
Chief Executive Officer Jonathan Callaghan said operating profit increased 1.5% from the prior corresponding period to AUD 55.9 million. Chief Financial Officer Michelle highlighted that the result was supported by what management described as the continued strong performance of the investment portfolio, including AUD 72 million of property valuation gains over the period.
Michelle said Cromwell remains focused on “maximizing the value” of its investment portfolio and executing its growth strategy “which over time, should close the gap between NTA and our security price.”
Balance sheet, liquidity, and hedging
Management emphasized balance sheet capacity and liquidity. Gearing stood at 30.2%, which the company said is at the lower end of its stated 30%–40% target range. Cromwell reported AUD 418 million of liquidity at period end.
On interest rate risk, Cromwell said 71% of net debt was hedged at the end of the period. Michelle said the hedging profile is designed to provide protection if interest rates rise, while still allowing participation in potential interest rate falls should inflation moderate and the Reserve Bank of Australia reverse course.
Corporate costs were described as stable following the group’s exit from Europe in calendar 2024. Michelle also pointed to lower financing costs, stating that net financing costs decreased from AUD 28.9 million at 30 June 2025 to AUD 15.2 million for the six months to 31 December 2025, which she said was largely due to debt reductions achieved from European asset sales.
Portfolio performance and leasing update
Cromwell’s wholly owned investment portfolio comprises eight assets. The portfolio recorded AUD 72 million of positive valuation movements over the six months to 31 December 2025, with all assets externally valued. Callaghan said the uplift was driven primarily by “strong leasing outcomes” at 400 George Street, Brisbane, alongside modest portfolio weighted average market cap rate expansion of 8 basis points to 7.15%.
Portfolio occupancy was 97.2% at period end. Callaghan noted tenant concentration, with 68% of portfolio income derived from the top five tenants, and about 40% of income coming from Australian government tenants across state and federal levels.
During the Q&A, management provided further color on performance at 400 George Street. In response to a question about net property income (NPI) declining despite only a modest change in occupancy, the company said a “reasonably large” federal government tenant had vacated, and while the space has been re-leased, there was a gap between the departure and the new tenant commencing that impacted NPI. Management said leasing spreads on the outgoing and incoming tenant were positive, at about 4%–5%.
Asked about leasing inquiry at 207 Kent Street, management said leasing activity was “ticking along,” with some short-term impact from handbacks but “reasonable” inquiry and inspections continuing. The company said it leased “just a little under 2,000 square meters” in the last half and indicated it may fit out at least another floor, noting fitted space can turn over relatively quickly once built.
On incentives, management cited a 39% incentive for a Legal Aid lease and said the bulk of leasing over the last six months came from that transaction. More broadly, management said it had not noticed any improvement or deterioration in incentive levels.
Platform growth, Terre acquisition, and industrial expansion
Callaghan said assets under management grew 13.6% since June to AUD 5 billion. Over the half year, Cromwell’s investment management platform grew by AUD 560 million to AUD 2.8 billion following the acquisition of Terre Property Partners, which management said added industrial investment management and development capability.
Callaghan said Cromwell has taken a 19.9% stake in an industrial portfolio managed by Terre, now referred to as the Cromwell Industrial Partnership, with the remaining 80.1% owned by Straits Trading Company. The company said its intention is to recapitalize and grow the vehicle, with a capital raise planned to commence next week.
Management described the Cromwell Industrial Partnership as comprising seven logistics assets across Bayswater, Salisbury South, and Port Adelaide, with 98.4% occupancy and a weighted average cap rate of 6.1%.
Development progress, outlook, and distribution guidance
Callaghan said the group launched a new wholesale office fund to acquire 100 Creek Street in Brisbane, with a capital raise “on foot” and on track to raise more than AUD 100 million. He also provided an update on the Barton One development in the Australian Capital Territory, stating it is progressing on time and on budget, with completion expected in April 2027. Management said it is in preliminary discussions with potential capital partners, which were described as progressing positively.
On market conditions, Callaghan said the company believes valuations have stabilized and highlighted CBRE research indicating office economic rents have increased 50%–70% since 2020 and industrial economic rents have risen 60%–90% over the same period. He also said the supply pipeline is expected to be constrained, with supply forecast to fall below the 10-year average across major sectors between 2025 and 2030.
For the near-term outlook, Cromwell reiterated its focus on expanding third-party AUM and progressing a pipeline of new products in industrial and office, while continuing work in retail. The company also emphasized maintaining high occupancy and managing the balance sheet conservatively.
Finally, Cromwell reaffirmed guidance for an annual distribution of AUD 0.03 per security for fiscal 2026, to be paid quarterly.
About Cromwell Property Group (ASX:CMW)
Cromwell Property Group (ASX:CMW) is a real estate investor and fund manager with operations on three continents and a global investor base. Cromwell is included in the S&P/ASX200. As at 30 June 2022, Cromwell had a market capitalisation of $2.0 billion, an Australian investment portfolio valued at $3.0 billion and total assets under management of $12.0 billion across Australia, New Zealand and Europe.
